COMPARING COSTS by Mike Mehren Ph.D.

COMPARING COSTS
BY MIKE MEHREN

This month seems like a good time to talk about cost and how we compare one item with another. I still haven’t gotten over the tax aftershock; and have devised a simplified form for the IRS. Enter your total earnings for the year. Send in 80% of that amount…and have a great year.

Most of the items we purchase or sell are priced by the unit. The units may be pounds, tons, gallons, bales, # of head, or price per hundredweight.

We hope to stretch our funds as much as possible, or conversely, sell at the highest price. How do we determine whether we got a good deal or got screwed (which is my personal area of expertise)? We compare the price against other products that are the same or very similar.

Let’s look at some examples of these comparisons.

1. selling grain; we’d have to compare wheat vs wheat; not barley, oats, or corn. To take that further, we should compare soft white vs soft white, not dark northern spring. We would also compare the weight per bushel, moisture, and delivery point. When do we receive payment? How does our price compare with market quotes for that particular delivery date?

2. buying hay; we’d compare alfalfa vs alfalfa, not grass, grain, or alfalfa/grass hay. We’d have a hay test run (oh, yes we would!!) to determine the quality. We could use RFV (relative feed value), or Crude Protein and TDN. We should check to see what the moisture content is. We want to know if the hay has been tarped, stored under cover, how old the hay is, whether there is damage to tops/bottoms, or sides exposed to the weather. Is the price delivered to the ranch, or at the stack? Do we have to unload it, or will the seller arrange to unload it for us? Do we need to pay for it on arrival, or can we put a certain percent down and the balance at some later date? How does our cost compare with similar hay in our area?

Hopefully these examples convince you that there are a lot of factors that might go into a comparison of products; not just price per ton.

Buying feed supplements also entails some details that should be looked into so that an accurate comparison can be made.

1. Are they used for the same purpose? What is the feeding rate? Do they guarantee the same nutrients? Is it bagged or bulk? Is the price delivered or do we have to pick it up at the source? What is the form (block vs cube vs liquid vs tub vs granular)? How does that fit into our labor and management plan?

Let’s look at these questions as they pertain to buying feed or a supplement.

Purpose: Is this designed to be a protein supplement?

Example:

	Mike’s Magic	Tim’s Professional
	50 lb bags	50 lb bags
	delivered to ranch	delivered to ranch
Crude Protein	24%	24%
Calcium	10%	2%
Phosphorus	8 %	1%
Feeding Directions:	Feed 2 oz daily	Feed 2 lb daily
Cost/ton	$450	$290
Cost/lb (Price÷2000 lb)	$.225	$.145
Daily cost = Cost/lb x intake	$.225 x125 = $.028	$.145 x 2 = $.29

.Now for some factors that go into the decision.
1. The protein in Mike’s Magic is insignificant because we are only feeding 2 oz daily. It would provide about ½ oz. of protein. A cow needs about 1.9 lb. of protein. However, in Tim’s Professional, even though it’s has the same percent of protein, it provides 0.48 lb protein because it will be fed at 2 lb daily.

2. Mike’s Magic is a mineral supplement, which happens to use a carrier in it that is quite high in protein. Even though Tim’s is 10 times more expensive than Mike’s, if we need a protein supplement, it is the correct choice.

SIMILAR NUTRIENTS OR ADDITIVES

	Mikes’s Magic	Tim’s Professional
	50 lb bags	50 lb bags
	pick up at store -20 miles	delivered
Salt, %	80	25
Calcium, %	none	10
Phosphorus	none	10
Zinc, ppm	7000	7500
Copper, ppm	3000	3200
Selenium, ppm	100	120
	S-methoprene 200 gm/ton	Lasalocid 1600 gm/ton
(S-Methoprene is chemical name for Altosid, Lasalocid is chemical name for Bovatec).

Mike’s Magic is simply a trace mineral salt, while Tim’s Professional is a well-balanced mineral that contains a relatively low level of salt. Those are pretty serious differences, however the biggest difference is in the feed additive listed at the bottom. S-Methoprene is an insect growth regulator that prevents the development of horn fly larvae. It is a substitute for a back-rubber or an ear tag containing an insecticide. Lasalocid is an ionophore antibiotic that improves feed efficiency and rate of gain. In this particular example, the additive would dictate which of these products you might buy depending on your purpose. You might inquire whether both
additives can be added to a single product. In some cases this is allowable.

The form of the supplement may influence your purchase decision.

Supplement type	# 1	# 2	# 3	# 4
Crude Protein,%	30%	30%	30%	30%
Fat, %	--	1.2	5	2
Vitamin A, IU/lb	40,000	20,000	30,000	50000
Selenium, ppm	6.6	3.3	6.6	13.2
Intake, lb/day	1	2	1	0.5
Form	Tub	Liquid	Granular	Cube
Cost/ton, $	460	290	345	666
Cost/head/day, $	0.23	0.29	0.17	0.17
Cost for 100 head for 100 days, $	2300	2900	1700	1700

In this example # 3 and 4 cost the least/head/day. The amount of intake has a huge influence on how much will be spent on this supplement. It is certainly more important than the cost/ton. A fat content of 5% may seem quite impressive relative to the other choices, however at 1 lb daily intake 5% fat equals less than 1 ounce of fat. In practical terms it has very little value to your animals. Your labor will also affect your decision. It’s possible that you can’t get to the cattle on a regular basis, or that feeding the supplement takes a full day. This could lead you to choose a supplement that a dealer delivers, such as a liquid, or one that you can put out enough for 2 weeks such as a tub.

When making a buying or selling decision, consider all of the factors that are related to the product…not just cost alone. Factors other than cost can make a huge difference in your net cost or return.

Michael J. Mehren, Ph.D. is a livestock nutritionist disguised as a short, fat hen turkey slithering through the forest south of Hermiston, Oregon. He can be contacted by Email at mehrens@eotnet.net.